Insured losses from Hurricane Irene's rampage through the Caribbean will cost insurers between $500m and $1.1bn, risk modelling firm AIR Worldwide estimates.

The modeller expects losses from the Bahamas, which Irene hit yesterday, will account for 60% of the total - between $300m and $700m.

AIR said the estimate includes wind and precipitation-induced flood damage to insured onshore residential, commercial and industrial properties (and their contents), automobiles, and business interruption losses. The estimate covers the Bahamas, Puerto Rico, Dominican Republic, Turks and Caicos, and other Caribbean territories.

As of 08.00 Eastern Time on Friday Irene was rated category 2 on the Saffir-Simpson scale and was located 375 miles south-southwest of Cape Hatteras, North Carolina. The storm is expected to make landfall on the Outer Banks of North Carolina on Saturday afternoon local time as a category 3 storm.

Forecasts suggest Irene could make a second landfall on Long Island, New York, as a category 1 storm on Sunday. Risk modelling firm RMS said there is a high potential for New York City to be affected by the storm. Irene's large windfield could mean that some effects of the storm will extend beyond the Tri-State area of New York, New Jersey and Connecticut, the modeller said.